Sunday, October 9, 2011

Life Insurance Options for People with Poor Health or that are Overweight / Obese

If you have bad health and are wanting life insurance, you likely have more options than you think.

ANYONE can get life insurance, no matter what your health situation is. This is true even if you are currently receiving treatment for things such as a recent Heart Attack, Cancer, a Stroke, or Parkinson's disease. If you have had treatment for any of these things in the last 2 years, the ONLY type of life insurance policy that you will likely qualify for is one with a Modified Death Benefit.

Modified Death Benefit - if you have received treatment within the last 2 years for your health condition(s):
Life insurance policies with a Modified Death benefit are often "Guarantee-Issue", meaning that no matter how bad your health may be, you will be accepted. The premiums on these types of policies are higher than standard life insurance policies.
These types of policies usually won't give you the full death benefit until the 4th year that the policy has been in force. If the insured passes away during the first few years, the premiums are returned with interest to the beneficiaries.
Let me give an example to further illustrate:
John had a heart attack 4 months ago. He purchases a Modified Benefit Life Insurance Policy with a $10,000 death benefit. If John dies within the first 3 years after he purchases the policy, his wife will receive all of the premiums that they had paid in during those years, plus 10%. She will NOT receive $10,000.
If John dies AFTER having the policy for 3 full years, his wife will receive the full $10,000 tax free.

Immediate Death Benefit - if your health condition(s) have been stable for 2 years or more:
If your health condition(s) have been stable for 2 years or more, there is a very good chance that you can get life insurance with Standard/Normal Rates, and have an IMMEDIATE death benefit the day after the policy is in force.
Here is an example:
Sarah was diagnosed with cancer 5 years ago. She underwent treatment and took medication for a couple years and was pronounced "cancer-free" by her doctors. She has now been free of cancer for more than 2 years and wishes to apply for a $100,000 life insurance policy. Sarah will likely get accepted with a Standard Rating, and will be immediately covered from day one. Her beneficiaries would receive the full $100,000 tax-free death benefit even if she passes away the day after taking out the policy.

If you are Overweight / Obese:
Many insurance companies don't care what your weight is, but most companies do. If you are overweight, you will be limited on your options. You will probably have to get a Whole Life policy with a death benefit of $35,000 or less, or go with a company that is very liberal with their height/weight requirements. If you can pass the height/weight requirements with such a company, you will probably only be able to get a Simplified Issue policy. This means that you probably will not have to take a medical exam, but your rates will be a bit higher than they would be with another company that has stricter height/weight requirements. You also may not be able to get as high of a death benefit as you would like.
To sum it up: If you are getting a Whole Life policy, you will have few (if any) restrictions. If you are getting larger Term or Universal Life policy, it will have to be with a company that has liberal height/weight requirements, and will probably pay higher rates.